South Africa Targets FATF Greylist Exit by October

South Africa is aiming to be removed from the Financial Action Task Force (FATF) greylist by October this year, according to a National Treasury official.

The country, which was placed on the FATF greylist in 2023 due to concerns over its anti-money laundering (AML) and counter-terrorism financing (CTF) measures, has been working to address the identified deficiencies.

Speaking at a financial sector conference, National Treasury official Ismail Momoniat stated that significant progress has been made, with only two outstanding action items remaining. “The good news is that we’ve only got what are called two action items to do,” he told the conference.

One of the remaining tasks involves proving a sustained increase in investigations and prosecutions related to serious and complex money laundering, particularly concerning professional money laundering networks, enablers, and third-party money laundering. The second requirement is to demonstrate a sustained increase in the identification, investigation, and prosecution of a full range of terrorist financing activities.

Momoniat acknowledged that these final items present a major challenge. “The remaining two items ‘are the toughest’ as it is a big challenge to find and prove third-party money laundering,” he explained. However, he expressed optimism that if all outstanding issues are addressed by June, an FATF onsite visit could take place in September. If the country passes that evaluation, it will be removed from the greylist in October.

Despite the reputational damage caused by being on the FATF watch list, Momoniat suggested that the designation has had a positive impact on South Africa’s institutional framework. “Being on the watch list has been good for South Africa, as many of our key institutions, especially in law enforcement, were deliberately weakened under state capture,” he remarked.

State capture, a term referring to systematic corruption in which small groups influence or control government institutions for personal gain, has been a significant issue in South Africa in recent years.

South Africa’s central bank governor, Lesetja Kganyago, previously indicated that he was confident the country would be removed from the greylist by 2025, given the extensive reforms underway. He acknowledged the economic toll of the greylisting, calling it a “costly episode for us.”

“The lesson is that joint efforts are required to look after the integrity of South Africa’s financial system. We all suffer when this is compromised,” Kganyago emphasized.

The FATF greylist currently includes 25 countries under increased scrutiny as they work to enhance their financial crime compliance frameworks. Analysts have warned that greylisting can complicate efforts to secure funding from multilateral development institutions and official lenders.

If South Africa successfully addresses the remaining concerns and passes the FATF evaluation, its removal from the greylist in October would mark a significant milestone in restoring confidence in its financial system. 

By fLEXI tEAM